Martha Stewart to Upscale Collection at Macy's

The Martha Stewart Collection at Macy's will begin to include a stronger presentation of luxury or better priced items — an unexpected shift that has come in response to shoppers' demands for the brand's higher bracket assortments at the department store.

Speaking at the Goldman Sachs Internet Conference here, Martha Stewart Living Omnimedia president and ceo Susan Lyne said, "Overall, we are very much on plan with Macy's despite this downturn in the economy, and we've had some surprises, one of them being [the success of] our luxury or best product, which initially Macy's didn't think we would be able to play in."

"But it turns out we fill out in our best," Lyne said, "and that's because people understand the value proposition — what you can get for $199 from us looks like it would be $400 at Bergdorf's."

For this reason, the company is branching out "that part of our business pretty dramatically, and it's more surprising even because we were known as a mass manufacturing line. To be able to play at that very high level is nice," she said.

MSLO is growing other aspects of its 2,000-sku, $3-to-$600 Macy's home program, which launched last September. New categories, such as storage, gifts and more home décor pieces, will be forthcoming.

By staying focused "within our core" home area, and not in unrelated businesses "like fragrances" and others, she said, "there are areas where we can build this pretty dramatically" at Macy's.

On another front, Lyne indicated that online retailing by MSLO is entering a new phase. She said the company is preparing to embark in 2009 on "very different e-commerce content than we had before."

"On our old site we did the manufacturing, we held the inventory, the products were great, and we lost an enormous amount of money," she explained. "It's not what we are good at."

The new plan is to "essentially be the front end, the interface for consumers," while "a middleman partner" will handle fulfillment.

Currently, visitors to www.marthastewart.com come "mostly for content, interestingly," she explained. They can view Martha Stewart-branded products but they can't buy them. The site allows users to connect to www.macys.com or www.kmart.com to do the actual shopping for the home guru's wares. Under the new plan, consumers will experience all the e-commerce steps within the Martha Stewart site.